SOCIAL SECURITY - KENYA

By Geoffrey A Omondi – DLC

Ministry of Labour

LEGAL BASIS FOR SOCIAL PROTECTION

Existing ILO standards in Social Security – Recommendation no. 67 and 69 of 1944

Social Security (Minimum standards) Convention 1952 no. 102

The ILO Constitution and Declaration of Philadelphia

The Universal Declaration of Human Rights The Constitution of Kenya National Legislation – Cap 258 Laws of Kenya

NATIONAL SECURITY FUND (NSSF) ORIGIN IN KENYA

The National social Security Fund was established in 1965 through an Act of Parliament

Chapter 258 of the Laws of Kenya The Fund initially operated as a Division

under the Department of Labour in the Ministry of Labour

TRANSFORMATION

In 1987, the NSSF Act was amended transforming the Fund into a state Corporation under the Management of a Board of Trustees

BOARD OF TRUSTEES

Has its membership drawn from COTU FKE Ministry of Labour

NSSF CORE FUNCTIONS

Registers members Receives contributions Manages Funds of the Scheme Processes and Ultimately pays out benefits to eligible

members or dependants

CONTRIBUTIONS

These are made and received from workers who are members

Employers contributions Individuals Domestic workers The focus now is on all including those

in the informal economy

REGISTRATION

Any Kenyan above 18 years can register with the NSSF

All that is required is production of an Identification Card (ID)

If employed, production of an introduction letter from employer

Continuity of contribution to same account in event of change of employment

PLANS UNDERWAY

Plans are underway to further amend the NSSF Act in order to convert the Fund into a mandatory National Social Insurance Pension Scheme to which every Kenyan with income shall contribute a percentage of their gross earnings to guarantee basic compensation in case of permanent disability, basic assistance to needy dependants in case of death and monthly life pension upon retirement

LEGAL NOTICE NO. 159

On 19th October 2009, the Minister for labour made a commencement order which require that employers of 1 – 4 employees registers with the NSSF

Under this order, all employers with at least 1 employee to start remitting contributions to NSSF

An emergence of a international framework for the protection of domestic workers.

PAYABLE BENEFITS

These fall in six (6) categories(1) Age / Retirement Benefit(2) Withdrawal Benefit(3) Invalidity Benefit(4) Emigration Grant(5) Funeral Grant(6) Survivors Benefit

AGE / RETIREMENT BENEFIT

Members are eligible for this benefit when they reach the age of 55 years or when they ultimately retire from regular paid employment

WITHDRAWAL BENEFIT

Members are eligible for this benefit when they reach 50 years of age and have retired from regular paid employment

A member would opt to apply for this benefit (over the age / retirement benefit if they retire before attaining 55 years of age )

INVALIDITY BENEFIT

A member certified to be permanently incapable of working because of physical or medical disability

Members who are at least 50 years of age and suffer from partial incapacity of a permanent nature that prevents them from undertaking employment

Application form be endorsed by a qualified doctor at the hospital / clinic attended

EMIGRANT GRANT

This grant is paid to members who are permanently emigrating from Kenya

Affidavit of permanent emigration . This must contain the phrase without

intention of coming back Citizenship of country of residence

FUNERAL GRANT

The grant is payable to a dependant of a deceased member

This dependant must be nominated by the family and must be identified by local administration

SURVIVORS BENEFIT

This benefit is payable to the survivor(s) dependants (s) relatives of a deceased member

The dependant relatives qualify for this benefit in the following order :

(1)The husband / wife of deceased member(2)All Children irrespective of age or gender (if

the husband / wife of deceased member is also deceased, or if the deceased member

Was a single parent) children who are minorswill be paid through bank accounts orconfirmed guardians(3) The parents of the deceased ( if the

deceased member was not married and had no children)

(4) Sisters / brothers of deceased (if the deceased was single, had no children and both parents are deceased)

(5) The guardian to the children of the deceased member ( where both parents are deceased and all the deceased members' children are minors)

An applicant who has letters of administration

where all dependants are exhausted

LABOUR & INDUSTRIAL RELATIONSS

Unemployment and underemployment remain a major challenge in Kenya

Assess total employment statistics in formal Sector

Employment in the informal economy Total Population Mostly young people with no special skills As at 2007, employment by sector was as

follows :

EMPLOYMENT BY SECTOR

Informal sector – 7.5 million Manufacturing sector – 0.26million Agricultural sector – 0.34 million The informal sector remains major

employer creating over 426,000 jobs annually which account for over 89 % of all new jobs

The sector is however characterized by low productivity, skills shortage and low wages

INFORMAL ECONOMY

There is no universally accurate or accepted description or definition of the term informal sector

There is however a broad understanding that the term accommodates considerable diversity in terms of workers, enterprises and entrepreneurs involved

ECONOMIC ACTIVITIES

It refers to all activities by workers and economic units that are in law or practice not covered or insufficiently covered by formal arrangements

Their activities are not included in law which means they are operating outside formal reach of law or is not applied or not enforced or the law discourages compliance because it is inappropriate, burdensome or imposes excessive costs

TYPE OF WORKERS HERE

These include both wage workers and Own account workers Most own account workers are as

insecure and vulnerable as wage workers

Move from one situation to the other Because they both lack protection rights

and lack representation, these workers often remain trapped in poverty

EXLUSION IN COVERAGE

Constitutes discrimination Official negligence Denial of rights NSSF for long covered only formal

workers Over 70 % of total employment is

excluded from public social security.

THE MAIN SCHEMES

The National Social Security Fund (NSSF) which is a provident Fund model designed to cater for social protection upon retirement

National Hospital Insurance Fund (NHIF) catering for health care

Mandatory / Voluntary Funded / Pension Schemes Public / Private Provident Funds and more

LIMITED COVERAGE

Contributions to both NSSF & NHIF though mandatory for workers in both public and private sector is limited ( contributions)

For long covered employers with five employees and above

Now extended to domestic workers and other in informal economy

Amount of benefits low !

OTHER CHALLENGES

Workers & Families are not covered – lack of contributory scope / capacity

Benefits are not granted or paid to elderly, survivors or disabled

Large numbers particularly elderly must continue to work often in informal economy

Low wages in informal economy Resistance – women and youths Governance issues

OTHER REALITIES ON GROUND

The economic and financial crises have presented challenges in formulation and implementation of the policies in support of Social protection

Too much debate on technical issues How to share national income Who bears the risk burden ?

EMPLOYMENT PATTERNS

Informal sector Casuals Seasonal Short contracts Contract and subcontracting Home working all present major

challeges

BASIC SOCIAL PROTECTION FLOOR

It has become important for the country to have an enhanced and well structured social security system – having a basic social security Floor with minimum set of Social Security benefits for all covering access to basic health care, income security, child benefits, unemployment benefits and maternity benefits

DOMESTIC WORKERS

Found in households, suffer imbalance of power relations

Are frequently abused Excessive working hours, low wages and

absence of Social Security, health care No leisure time, physically and sexually

abused Lack trade union representation and

poor social status

WHY NEED TO WIDEN COVERAGE

Social Security or social protection is needed to provide resource allocation in an economy

This is necessary for provision for old age, disability, accidents and sickness as well as safety nets and social assistance programmes to ameliorate the impact of adverse shocks particularly on the poor

This can prevent child labour, malnutrition and school drop outs

GOVERNMENT INTERVENTIONS

In order to improve situation in social security Government is reviewing NSSF Act to convert it from a provident Fund to a pension scheme and expand coverage to provide for requirement of people in the informal and other sectors

Exploring flexible contributions to allow more contributors to social security scheme and non contributory schemes such as social assistance programmes to assist poor & vulnerable groups

OTHER MEASURES

Exploring possibility of Social Security Fund lending money to employees and employers for development purposes and especially for housing projects for their workers

OTHER INITIATIVES

Creation of employment to assist widen coverage such as :

Kazi kwa vijana (KKV) The Youth Enterprise Development Fund Women Enterprise Fund The Community Development Trust Fund K -Rep Development Agency Kenya Youth Business Trust